Chinese walker

Here we are yet again in the midst of another “global economic crisis.” From the hilltops of Davos, Switzerland, Morgan Stanley’s permabear Stephen Roach has shouted warnings of potential economic “Armageddon.” Superinvestor George Soros designated the current state of the global economy “the worst market crisis in 60 years.” Bill Clinton labeled it “the biggest financial crisis since the Great Depression” —— even as global stocks responded by slumping 7.7% in January —— the worst start to an investing year since Morgan Stanley began publishing data in the 1970s.

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Economists use many types of data to measure the performance of an economy.Three macroeconomic variables are especially important: real gross domesticproduct (GDP), the inflation rate, and the unemployment rate. Real GDP measures the total income of everyone in the economy (adjusted for the level of prices).The inflation rate measures how fast prices are rising.The unemploymentrate measures the fraction of the labor force that is out of work.Macroeconomists study how these variables are determined, why they change over time, and how they interact with one another.

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